Islam is a religion not only in the ordinary sense of the world, but also a complete code and system of life for any individual living in this world. While other religious preaching and practices provide general guidance only for the relationship between man and his Creator, Islamic teachings and methods guides man in his relations with ALLAH the Almighty and provide and guide them the norms which govern human beings temporary existence in this world. Islam take into account an individual's political, social economic, moral and all other consequential aspects.Every society has its own social & economic system. Islam being a complete code of life as well as comprehensive and distinct social system, possesses a corresponding social & economic system of its own. Islamic economics system is fast developing into a different and distinct part of economics . Large number of Islamic financial & banking institutions have been apparent in various Muslim as well as in some non-Muslim countries around the world. Islamic financing is an exception that has taken many spectators and viewers by surprise. Islamic Finance and banking is mainly refers to financing or banking activity that is dependable and homogeneous with the principles of Islamic law (Sharia) and its practical implementation through the progression and development of Islamic economic system. In Shariah Law term interest is denoted as Riba. Interest payment is prohibited in Islam. The main purpose or Objective of Islamic Banking and finance is to make positive contribution to the fulfillment of Socio-economic objectives of the society as a whole. The flaw of the currently operative interest-based system in most countries of the world is that it create a strong justification for introducing of a new system for the international economy. In comparison to this Islamic banking and finance, which tries to introduce the principle of risk/reward-sharing higher the risk greater the chances of return and remove interest based system. Islamisation of Financial System in Pakistan
Islamic Financing in Pakistan is defined mainly as Islamic banking sector which follows the ethics, norms,codes and values of Islam that are Controlled and governed according to the rules and regulations of Islamic Shariah Islamic financing system in general term is expected to avoid interest based transactions, that are not only banned and prohibited according to the Shariah law, but Islamic Shariah Law also participate actively in achieving the goals and objectives of an Islamic economic system. Interest free banking is still not a very clear concept because it only shows different operations and tools that avoid interest.The first attempt of any sort related to Islamic financing was when a small saving bank in a rural area of Egypt in 1963 was established for the purpose of practicing different ways of Islamic financing, but in today’s world Islamic Banking and financing is consider to be the most established, fastest growing sector and a very important segment of international market. Pakistan is consider one of the three pioneer countries in the world that has tried to implement interest free banking at national and comprehensive level.
Islamic banking is an exception that has taken many observers and viewers by surprise Islamic Finance and banking is mainly refers to banking or banking activity that is dependable and homogeneous with the principles of Islamic law (Sharia) and its practical implementation through the progression and development of Islamic economic system. In Islamic Shariah Law term interest is denoted as Riba. Interest payment is prohibited in Islam.The main purpose or Objective of banks and other financial institution under Islamic systems to make positive contribution towards the fulfillment of Socio-economic objectives of the society as a whole. Islamic Bank is a financial and social institution which established...